A correspondent asked:
I am planning to switch my bank and am wondering if there’s one you recommend?
Checking in Chelsea
Banks are a commodity service with little that distinguishes one from another. All banks have FDIC insurance and free lollipops and they should offer ATMs, online bill payment, check deposit, a phone app, etc.
Here are the guidelines I would use to select a bank.
1. Avoid any bank that charges monthly service fees.
Most banks offer free checking and saving accounts, especially if you agree to direct deposit of your paycheck or use of their debit card.
2. The bank’s phone app and online access features are most important.
A bank’s app and online web access are the key considerations for most people so make sure they have the features you need. Besides checking your balance, getting notifications, and transferring money, apps now offer check deposits, which should eliminate the last reason to visit a branch or ATM.
3. The convenience of the bank branch and the ATM network don’t matter that much anymore.
Few of us ever need to step inside a bank branch and ATM use is becoming less important. Most of us spend very little cash and when we need it, you can get cash back when swiping with your debit card at many retail establishments.
4. Consider an online bank — they offer significantly higher rates on your savings.
Interest rates on savings accounts vary tremendously across banks. Usually, the biggest banks (eg, Citi, Bank of America, Wells Fargo) offer the lowest savings rates and the online banks (eg, Ally, Capital One) offer the highest. You can get a sense of current online rates here.
5. Stay far away from Wells Fargo.
It seems they just can’t stop defrauding their customers as one story emerges after another about their horrible ethics.
Direct deposit and automated bill payment make switching banks a hassle so choose wisely.
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